Understanding internal systems processes is not easy. Most organizations today have complex structures in place, each with several processes for their varying business units which makes managing and tracking movement within a company incredibly demanding. A prime example of this is the accounts receivable process used by your finance team. While the basic duties of finance teams are common across the board, no one finance department is the same. Each department has their own approach to managing their collections, they use different ERPs, and they face different challenges with their customers. However, one good way for any finance team to get a clear picture of their collections process is to implement an Accounts Receivable System Flowchart.
Thinking through and documenting the process flow is important, as it summarizes the common steps finance teams take when managing their company’s collections process. The flowchart offers clarity to stakeholders by illustrating what effort is required at each level of the collections process, and what the necessary steps are for ensuring money is collected on time from customers.
Visually, it is apparent from the traditional flowchart that when a supplier sends even just one invoice to a customer, the path to final payment often takes a non-linear approach, with many different moving parts that must be managed accordingly. The complexity of this process becomes exacerbated when you reflect on the “one-to-many” nature of most supplier-customer relationships. A customer may have only one supplier, but, most, if not all suppliers have many customers who carry out transactions with them on a regular basis. Without the flowchart available, tracking customer collections would be near impossible. Breaking down the path to final payment in a visual format is integral to simplifying the collections process and should be used by suppliers at all times so they may better manage their receivables.
The key to improving the accounts receivable process lies in automation. With all of the progress that’s been made technologically in the last several years, it’s mystifying to see finance teams who have chosen not to advance their collections process to keep up with the times. There are a number of solutions in the marketplace today which specialize in automating B2B collections. Implementing any of these tools would enable businesses to modernize their existing collections process and adopt the new Automated Accounts Receivable System Flowchart.
With automated accounts receivable, the road to collecting from customers is much more straightforward and less reliant on human intervention. Implementing such a solution will give your finance team back the time it needs to tackle meaningful work, allowing you to grow and scale your business and generate new cash flows.
The first flowchart outlined above is effective for illustrating the traditional steps most finance teams take, but this is a dated approach to managing collections. The monotonous nature of each task means finance teams spend more time trying to collect money from their customers than they do on meaningful work. If the first flowchart above reflects the current state of your collections process, you may want to think about how you can improve your collections experience for both your employees and your customers. Here are four ways AR automation software can help improve your collections process:
To learn more about how AR automation software can help your finance team improve its collections process, contact us today.
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